Senate budget proposal offers improvements in healthcare, misses the mark on education

RALEIGH (May 17, 2023) – The North Carolina Senate’s budget proposal released earlier this week reflects some bright spots, including incremental investments in healthcare, but falls well short of meeting the needs of our schools. The legislature must do more to strengthen our education system, improve safety net programs, and build more equitable systems so all North Carolinians can achieve economic security.

While many aspects of the budget will undoubtedly impact low-income North Carolinians, the following proposals on education, energy, healthcare, and the criminal legal system stand out.

Education 

Just this past November, the North Carolina Supreme Court ordered lawmakers to fund the Leandro Comprehensive Remedial Plan to ensure all students receive the education they are constitutionally owed. Unfortunately, the Senate proposal funds less than seven percent of the Plan’s recommended spending increase in year one of the biennium, and less than four percent of the Plan’s recommendation in year two. In fact, school budgets overall would decrease by two percent from this current school year. The legislature continues to adopt the radical notion that they can simply ignore the provisions of our constitution that make educational opportunities provided through the public school system a fundamental right.

Importantly, we are facing a record teacher shortage, with more than one in 20 classrooms unable to find a fully qualified teacher. Despite this, the Senate budget proposal would cut teacher salaries in inflation-adjusted terms. The federal Office of Budget and Management predicts that inflation will increase by approximately 6.5 percent over the next biennium. This budget would provide teachers with only a 3.8 percent average raise, meaning their pay will decline in real terms. By contrast, the Governor’s budget proposal demonstrated we can afford to do much better by our educators, as it fully funded the Leandro Plan to provide educational opportunities to every child and included teacher raises of over 10 percent in year one and 20 percent in year two.

Instead of addressing these challenges, the Senate budget provides a massive expansion of the state’s unregulated voucher program. The Senate budget would provide triple funding for the program by opening it up to wealthy individuals who have already enrolled their children in private schools, resulting in a massive giveaway of taxpayer money to the wealthiest North Carolinians. This program places further strain on public school budgets while exacerbating racial and socioeconomic segregation.

Energy Policy 

The Senate’s proposal provides a significant increase in the Low-Income Home Energy Assistance Program (LIHEAP) and related programs (such as crisis intervention and weatherization), from $108M in the first year of the biennium to $148M in the second. We are opposed, however, to the proposed prohibition of requirements for control of emissions from new motor vehicles. This measure would preempt the adoption of the Advanced Clean Truck rule—a rule that would reduce vehicle emissions and modernize vehicle fleets in North Carolina. We also oppose the prohibition on cap and trade requirements for carbon dioxide (CO2) emissions.

Healthcare 

The Senate budget proposal makes an effort to invest in the healthy future of North Carolinians by proposing to expand the North Carolina loan repayment incentive for rural providers, invest $10 million in telehealth infrastructure, and add 350 Medicaid Innovation waivers, which are important steps in the right direction.

We are, however, disappointed by the absence of Governor Cooper’s proposed program IHOPE (Improving Health Outcomes for People Everywhere Fund), which would support behavioral, child welfare and family well-being, and rural health initiatives; the absence of financial support for county Department of Social Services offices for the public health emergency unwind; and the allocation of $6 million to the Carolina Pregnancy Center (a religious anti-choice organization headquartered in Spartanburg, South Carolina).

We understand the desire to drive down healthcare costs but have concerns about the proposal to make hospital licensing contingent on saving $125 million annually after 2026. We look forward to a compromise that balances the need to save money on healthcare across the state with the necessity of keeping hospitals open. We oppose Section 9F.9 (repealing territorial limitations applicable to hospital authorities). Consolidation in our medical system harms patients. We are also concerned about the inclusion of Certificate of Need (CON) reform, as it has been historically controversial. Deliberations on CON reform, as well as making hospital licensure contingent on savings, may stall the passage of the conference budget between the House and Senate. Any delay in passing the budget is unacceptable, as it will delay the implementation of Medicaid expansion.

Criminal Legal System 

The Senate’s proposed budget makes incremental strides toward criminal justice reform but could be improved. We highlight a few notable provisions here.

First, we commend the Senate for allocating funds to establish six additional Public Defender Districts providing access to public defenders in sixteen underserved counties across the state. We believe that a balanced, fair judicial system requires fully funded legal services. We also support a budget provision that improves the state’s medical release and compassionate release laws to create more opportunities for the aging and individuals with chronic terminal illnesses to spend their final days at home.

However, we strongly oppose the proposed requirement that the Administrative Office of the Courts retain records and report annually on the dollar amount of each judicial waiver of criminal court costs. This reporting requirement will produce a chilling effect on judges who would otherwise act within their authority to waive court costs based on a finding that someone is not able to pay. The proposed provision would prevent thousands of North Carolinians from accessing much-needed relief from criminal court costs.

The Senate budget proposal fails to provide adequate funding for reentry support services, a major missed opportunity. Increasing reentry funding to support effective community-based programs and supportive services is critical for the successful reintegration of the thousands of North Carolinians returning home from incarceration each year.

Underpinning all the needed investments discussed above is the state’s revenue system. Unfortunately, the Senate’s proposal would accelerate reductions in the personal income tax rate to 2.49 percent over the next several years, imperiling overall funding adequacy and sustainability. As the budget process continues—following both the House and the Governor’s proposals—it is vital for lawmakers to prioritize the services, programs, and policies that will lift all people in our state and remove barriers to prosperity.

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